Green Supply Chain Strategies Outpace Action

Part of our Green Cover Story series

Cover Story: Food Processors go green

A recent McKinsey survey of more than 2,000 global executives found that while nearly half say that climate change is a somewhat or very important issue to consider in purchasing and supply chain management, fewer than 25 percent say their companies always or frequently take climate change into consideration in making supply chain decisions, reports Supply Chain Digest.

It’s notable that a sizable number of executives in manufacturing companies view climate change issues as either positive for them or equally a threat (higher costs) and an opportunity (new Green products to develop and market). Some 37 percent of thought the risks and opportunities were roughly balanced for their firms, and another 21 percent thought the opportunities far outweighed the risks.

McKinsey found 61 percent of all respondents expect a somewhat or very positive effect on profits should their companies manage the issues related to climate change very well – which in part explains the general corporate enthusiasm around sustainability, and the limited action thus far. Many companies may be waiting for new product markets to develop, but are taking a very slow approach to supply chain changes that might add costs for now.

McKinsey’s analysis shows that for consumer goods makers, 40-60 percent of carbon footprint resides upstream in the supply chain—from raw materials, transport, and packaging to the energy consumed in manufacturing processes. This means any significant carbon-abatement activities will require collaboration with supply chain partners – a time consuming and potentially expensive process.